Port sale plan ‘not an easy decision’: Andrews

Under the Victorian Labor opposition plan, the Port of Melbourne would be sold to private investors and an extra lane would be added to the West Gate Bridge (pictured). Photo: Penny Stephens

Mathew Dunckley

The buyer of the nation’s busiest container port could win the right to develop or lease a second port under the Victorian opposition’s landmark asset sales policy, dismissed later by the state government as a “con job”.

Opposition Leader Daniel Andrews announced on Tuesday that, if elected at next year’s poll, Labor would move swiftly to sell the Port of Melbourne by leasehold.

It would use proceeds to replace almost one-third of Melbourne’s 170 rail level-crossings with underpasses or overpasses to improve safety.

Mr Andrews said it was important to provide any potential investor with certainty, so a Labor government would look at offering the successful leaseholder as part of the contract the chance to also develop or lease a new port that Melbourne is likely to need.

The present port is expected to reach its capacity of about 8 million container movements a year about 2035, meaning a new port will need to be developed, either an alternative port or as a replacement. The Coalition government favours Hastings, south-east of the city, and the opposition an option in the city’s west.

Mr Andrews said decisions would be made about the exact structure of the deal, including the term of the lease, once Labor was in government but the sale would happen swiftly. Labor believes it could raise $6 billion from the sale. “We would want to make very significant progress in the first calendar year,” he said.

The move is a significant shift for Labor, which has opposed privatisations in the past but is looking to consolidate its lead in the polls through a positive infrastructure program. It also bolsters the federal Coalition government’s push for cash-strapped states to look at asset sales to fund infrastructure, particularly rail, instead of Canberra.

“This is not an easy decision for the Labor Party to make. I want to be the leader of a modern Labor Party,” Mr Andrews said, adding that opposition to asset sales was based sometimes on ideology rather than outcomes.

But As a party of jobs, as a party of productivity, a party of dealing with congestion, a party that is interested in better safety outcomes and a modern Labor party, this will I have absolutely no doubt be supported by our party because it’s critically important.”Mr Andrews said the party had no plans for broader privatisation or asset sales beyond those outlined in the document.

Brett Himbury, chief executive at IFM Investors, which earlier this year bought the Sydney and Kembla ports in NSW for more than $5 billion and manages $50 billion in funds, said there would be demand from investors for the Port of Melbourne.

“Bring it on,” he said.

“There is not many of them [ports], they don’t come up very often and what we would consider to be core infrastructure.” Mr Himbury said providing the ­winning bidder with some rights concerning a potential future competitor would increase the appetite.

“It is positive and sensible. It removes some of the competition and also diversifies the asset that you become the owner of,” he said.

Mr Andrews said offering a long-term lease rather than a full sale and the legislated hypothecation of the proceeds for other transport projects represented a “Labor way” of running the process.

He declined to nominate an expected sale price for the port.

“This is Australia’s best port, we will get a good and strong outcome for taxpayers, I think there will be strong interest from industry [superannuation] funds and lots of other investors who are looking for just this sort of asset,” he said.

Shadow treasurer Tim Pallas said the capacity of the Port of Melbourne was about eight million container movements a year.

“That means the asset is worth more to sell than what the government is proposing,” he said.

“Let’s not forget the ports of Sydney and Kembla sold for more than $5 billion and it is a lesser capacity port than the Port of Melbourne, it has more land constraints than the Port of Melbourne and therefore we think it’s a more valuable asset.”

No plans for broader privatisation: Andrews

The document states Labor’s approach has drawn heavily on the conservative NSW government’s approach.

Tourism & Transport Forum chief executive Ken Morrison said the sale was a “tried and tested” method of recycling capital.

“Using the revenue obtained from the lease for a dedicated, independent transport investment fund would deliver transparency and accountability to Victorian taxpayers, as well as providing greater amenity and reliability for the public transport and roads systems,” he said.

Labor’s plan pledges $300 million towards planning the Melbourne Metro rail tunnel. It then foreshadows the state funding $3 billion of the project, while seeking $3 billion from the private sector and a further $3 billion from the federal government.

Mr Morrison said the Melbourne Metro project needed to be funded more swiftly.

“We urge the government to look at ways to fund the project so it can commence as soon as possible,” he said.

Committee for Melbourne chief executive Kate Roffey also backed the asset sale process but said the sale of an asset such as the port should be used to seed an ongoing fund for infrastructure.

But Ms Roffey was also critical of the timeframe promised for Melbourne Metro.

“We believe waiting until the end of the decade is too long. Stage 1 of this project has been identified by Infrastructure Australia as ready to proceed,” she said.

“What is needed urgently is an innovative way to fund it.The Committee for Melbourne believes that governments must consider indirect user pays mechanisms to fund infrastructure projects.”

Labor’s plan also includes a proposal to shift 5000 trucks a day off the West Gate Bridge by building a tolled “West Gate Distributor” offering a new direct route down to the port and inner western suburbs.

Mr Andrews defended the absence from his plan of a full scale second river crossing from the western ring road as promised by the Brumby Labor government and strongly backed Sir Rod Eddington’s report on Melbourne’s transport needs.

‘Grossly underfunded con job’

Premier Denis Napthine ridiculed Labor’s plan, describing it as a “grossly underfunded con job” and suggesting the port sale would struggle to raise the touted $6 billion price tag for the port.

“That is extremely over-optimistic,” he said.

Dr Napthine said the transition to the new Port of Hastings required an “integrated” approach that a “premature sale” could compromise.

“We need to have an appropriate [plan] . . . rather than having competition between these ports that would be counter-productive to the development of another port,” he said.

He said that removing 50 level crossings on the eight-year timetable suggested by Labor would result in too much disruption and savaged Labor’s plan for not including a second river crossing through Melbourne’s western suburbs at the end of the East West Link.

The plan does include a new tolled link off the West Gate Freeway into the dock precinct.

Dr Napthine said its omission was an insult to the people of Melbourne’s west and Geelong.